acctt 417819

8. On August 1, Kim Company accepted a 90 day note receivable as payment for services provided to Hsu Company. The terms of the note were $10,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a

Answer

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a. debit to Interest Receivable for $150
b. debit to Notes Receivable for $10,000
c. credit to Notes Receivable for $10,150
d. credit to Interest Revenue for $150

9. If ending inventory for the year is understated, net income for the year is overstated.

Answer True
False

10. Use the following information to answer the following questions.

The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.

Date Product Z Units Cost
May 3 Purchase 5 $30
May 10 Sale 3
May 17 Purchase 10 $34
May 20 Sale 6
May 23 Sale 3
May 30 Purchase 10 $40

Assuming that the company uses the perpetual inventory system, determine the cost of merchandise sold for the sale of May 20 using the FIFO inventory cost method. Answer

a. $196
b. $250
c. $180
d. $204

11. Use the following information to answer the following questions.

The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.

Date Product Z Units Cost
May 3 Purchase 5 $30
May 10 Sale 3
May 17 Purchase 10 $34
May 20 Sale 6
May 23 Sale 3
May 30 Purchase 10 $40

Assuming that the company uses the perpetual inventory system, determine the ending inventory value for the month of May using the FIFO inventory cost method.

Answer

a. $494
b. $520
c. $422
d. $502

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